For most lucky Americans, tax time is the chance to get back some money from the government. The government refunds can take anywhere from three to six weeks to get back. Some people need the money much sooner than that and apply for a refund anticipation loan or RAL.
A RAL is a loan based on the amount of your anticipated refund from the government. A bank grants the loan based on the promise they will get paid back when a person receives their loan refund from the government. The high interest loans are usually originated through a tax preparation service. Some RALs may have a maximum dollar amount that can be loaned.
A RAL can give a taxpayer access to their refund within 72 hours in most cases and some in as little as 24 hours. A debit card is issued by some banks to the person receiving the refund. The debit card can be used like a credit card once the balance has been added to the card. Other banks will provide a check to the person anticipating the loan.
Many people take advantage of this service in order to pay outstanding bills that cannot wait for the check to arrive in the mail. Although the government offers a direct deposit option, not everybody has a bank account for the money to be deposited in. This is another benefit to the RAL debit card. The money can be withdrawn from any cash machine up to the daily maximum limit. However, the debit card may include fees when it is used to withdraw cash from a machine.
The debit card provides more security than receiving a large lump sum of cash. There is usually no cost to apply for the RAL as all fees are deducted from the anticipated refund. The RAL is granted after the IRS accepts the tax return.